• FHA helps California buyers make homeownership a reality.Sold Home For Sale Sign on Burst image by Andy Dean from Fotolia.com
  
  The Federal Housing Administration (FHA) is the world's largest government insurer of mortgages. As part of the U.S. Department of Housing and Urban Development, FHA has helped millions of low- to moderate-income borrowers make homeownership a reality. The agency arose from a need for increased homeownership in the United States and has altered its requirements according to the needs of communities and borrowers over time. In California, they have increased loan limits, helping people purchase in some of the most expensive areas, and have helped to fund money-saving programs.
  
  

Must Not Exceed Loan Limits

• FHA sets lending limits for loans they insure in California's 58 counties. The loan amount for the home to be purchased or refinanced through FHA may not exceed the limit for single-family, duplex, tri-plex or four-plex properties. The limits are based on the median incomes for the county and whether the property is located in a metropolitan or non-metro area. The limits for single-family properties range from $271,050 to $729,750, according to FHA.com. FHA requires a borrower who wants to purchase or refinance an amount that exceeds these limits to contribute the difference to the transaction out-of-pocket, through secondary financing or with down-payment assistance.
  
  

FHA-CalHFA Loan

• The California Housing Finance Authority offers the CalHFA, or "CHAFA," program for low-income first-time homebuyers. It consists of an FHA-CalHFA fixed-rate, 30-year first mortgage plus a 3 percent CalHFA down payment assistance second mortgage. Borrowers must have an annual household income below their county's income limits for family size and area. The home must be located in one of California's 58 counties and must be owner-occupied for the life of the loan. Borrowers must meet all credit and income criteria required by both FHA and CalHFA. As first-time homebuyers, they must not have owned a primary residence for the past three years, and they must have the legal right to reside in the United States, according to FHA Home Loans.
  
  

Home Improvements and Energy-Efficient Loans

• In addition to working with state assistance programs for purchases, FHA offers money for home improvements and energy efficiency. FHA's Energy Efficient Mortgage (EEM) is for existing properties. It allows borrowers to finance 100 percent of the costs to make a home energy efficient through weatherization repairs, energy-saving equipment and solar technologies, according to the FHA Handbook. FHA requires all improvements to be cost effective--the cost of improvement plus maintenance must be less than the present value of the energy saved. The property must be one or two units only, and the cost of improvements may not exceed $8,000. A home-energy ratings system (HERS) representative must inspect and determine the cost and savings for FHA. The representative must work for a California government agency, a utility, or entity approved by the state, according to the FHA Handbook.